It’s now been 10 months since the launch of the MaRS Financial Technology (FinTech) Cluster in February 2015. MaRS FinTech was created with a single vision and purpose: to provide a centralized hub that would be conducive to driving financial technology collaboration and innovation both domestically and internationally. It’s a place where all of the key stakeholders in the financial services industry can band together to build new and better products.
I want to share some of the observations I’ve made during my short time as the director of MaRS FinTech. In the past three months I’ve spoken to many Canadian fintech startups, financial institutions and investors, and I’ve found that they all share a common interest.
They want to know: “How can I get more involved in working with <insert key stakeholder name here>?”
MaRS FinTech was created to bridge the gap of missed business opportunities that other markets (such as London, New York City and Silicon Valley) have been capitalizing on for some time by bringing traditional financial institutions, investors and the startup community together on common ground. Innovation is an organic byproduct of collaboration between these three entities. One cannot thrive without the others and, while the risk profiles of these entities are different in each of those markets, the risk is even more challenging for Canadian firms simply because they are generally more risk averse, especially considering how new fintech is in Toronto.
The fintech industry continues to throw around words like “disruption” and “death by a thousand cuts” without realizing the subtle but negative effect they create: fear. We should be driven and motivated to bring the next generation of financial services to consumers who currently rely on legacy technologies that could be better, more secure and more efficient—but not because of fear, whether it be fear of losing revenue streams, fear of disintermediation or fear of losing more off of the bottom line. Let’s not be naïve—these fears are all realities for our incumbents. However, the first battle to be won is recognizing that these threats are also, in fact, opportunities.
Yes, it is crucial for financial institutions to have the ability to change and pivot in a constantly evolving and rapidly growing industry, but we need to come together for the right reasons if we are to benefit as an industry. Furthermore, disruption generally embeds a misunderstood sentiment from the startup community. There is much to be gained if you put the elephant and the mouse together in the same room—just refer back to my second paragraph.
Contrary to what you may have read in the media, there are signs of continued growth and progress in Canadian fintech. According to CB Insights, provided by MaRS Market Intelligence, we have seen a 124% increase in funding growth in the last year alone or $484 million from institutional funds, venture capital firms, private equity firms and angel investors within Canadian fintech. These are astounding numbers and they corroborate the boom we’re seeing in Canadian fintech.
What we need right now are patience and optimism. Peer-to-peer or alternative lending, wealth management and payments make up the bulk of our fintech companies. MaRS FinTech will continue to closely monitor all of the key performance indicators within Canadian fintech and will help drive innovation through collaboration. Now we need you to come into the ecosystem for the right reasons. We need to work together to build more efficient, cost-effective and flexible financial products and services that leverage new innovative technologies, which will naturally result in creating a better financial services infrastructure for all Canadians.
If you missed our last MaRS FinTech Cluster meetup, check out this Periscope video.